Defendants Seek Dismissal of SEC Lawsuit Over Misrepresentation of Facts
Summary:
Debt Box and other defendants are seeking dismissal of a lawsuit by the U.S. Securities and Exchange Commission (SEC), alleging that the SEC misrepresented facts to secure a temporary asset freeze. The SEC had previously accused Debt Box of enabling a $50 million fraudulent crypto scheme. The initial freezing order was overturned after a federal court in Utah ruled that the SEC had misrepresented evidence. The regulator currently faces a 'show cause order' for potential penalties due to its misconduct.
In a recent development, Debt Box and other defendants are seeking a dismissal of a lawsuit set by the U.S. Securities and Exchange Commission (SEC). The request comes after a court found evidence of deceit by the SEC to procure a temporary restraining order against the defendants. Lawyers representing Digital Licensing, operating as Debt Box, expressed to Judge Robert Shelby of the U.S. District Court for the District of Utah on December 4 that the SEC had severely misjudged the case and accused the agency of maintaining a false narrative to evade dismissal.
On August 3, the SEC had won a temporary restraining order that froze Debt Box's assets. The commission had argued that the firm might destroy evidence or shift assets abroad in secret upon learning about the forthcoming order. The SEC accused Debt Box of standing behind a fraudulent crypto scheme worth $50 million. The company had made sales of software mining licenses associated with tangible assets, which according to the SEC were unregistered securities, a claim denied by the defendants. They challenged the allegations as false and lacking in basic pleading standards.
Subsequently, on November 30, a federal court in Utah lifted the asset freeze on Debt Box. The court confirmed that the SEC falsely presented evidence, claiming Debt Box had terminated bank accounts and were planning to relocate to the United Arab Emirates to evade the SEC's jurisdiction. The firms' bank accounts were found operational, and a $720,000 transfer which the SEC claimed was sent abroad was in fact domestic.
The ongoing misrepresentation by the SEC led Judge Shelby to issue a 'show cause order' which essentially demands the regulator to justify why it should not be penalized for its conduct. Adding to this, Ripple's chief technology officer, David Schwartz, called the SEC's actions 'shocking'. Pro-Ripple lawyer John Deaton hopes the agency will be made to compensate for the harm caused to Debt Box.
In the lawsuit, besides Debt Box's four principals (Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson), 13 other individuals were also named in the SEC's action.
Published At
12/6/2023 6:34:28 AM
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